HO1! - Squeezing HigherHeating oil has broken out of yet another pattern and is squeezing higher. This is occurring at the same time as the USOIL breakout. To review that post, view it here:
Now looking at heating oil futures, the first breakout occurred above the downtrend dating back to March 2026, where sellers rejected price at the trendline multiple times (red circles) before the actual breakout occurred in mid July.
Then, at the very beginning of August, old resistance flipped into new support (green circle) which established the low.
What is interesting is that at the same time this pattern was developing, an additional structure began to emerge. This pattern was a rising wedge which I have outlined with dotted black lines. Normally, rising wedges are considered bearish patterns and tend to break to the downside more often than not. However, price has just broken to the upside instead, and is already up 5.5% on the day.
With all of these oil related products breaking out simultaneously, it is likely we see prices push much higher, unless the US government intervenes. The main target for this breakout is the 1.618 extension around $5.60.
One other thing worth noting is the daily RSI. Trend strength is approaching overbought conditions, which makes it extremely important to watch how this RSI structure develops over the next couple of days. If the RSI can breach 70 and hold above overbought conditions, an even larger squeeze toward that 1.618 target becomes increasingly probable.
However, if price starts rolling over from here as trend strength begins diminishing from the 70 level, that could end up signaling a false break, so keep a close eye on that possibility as well.
